Energy bills: British Gas’ 10% profit rebate called ‘tokenistic philanthropy’ as owner Centrica’s profits hit £1.3bn in six months

British Gas’ decision to donate 10% of its profits to customers who are struggling with rising energy costs has been described as ‘tokenistic philanthropy’ and prompted further calls for nationalisation of energy firms.

The energy firm has promised to donate a portion of its profits to households in the form of grants worth around £750 each, although this will likely only benefit less than 1% of its customers according to experts.

British Gas says it will donate an initial £12m, slightly more than 10% of its pre-tax profits of £98m for the first half of the year, however its parent company Centrica reported massively increased profits in the same period, adjusted from £262m to £1.3bn.

This comes as Ofgem is set to announce another increase in the energy price cap on Friday, which is expected to rise from its current rate of £1,971 up to £3,553 a year in October.

Rebate will help ‘less than 1%’ of British Gas customers

British Gas has announced that it will donate around 10% of its profits from the retail supply arm of its business every six months for the “duration of the energy crisis”.

The donations will be put into an existing fund, the British Gas Energy Trust, which provides grants to British Gas customers in fuel poverty with less than £1,000 in savings.

Chris O’Shea, chief executive of Centrica, the parent company of British Gas Energy, said the cost of living crisis has prompted the firm to “think differently”.

He said: “As a responsible business we want to do more to support our customers during this difficult time.

“Committing 10% of our profits for the duration of the energy crisis will mean we can target help those who need it the most.

“This increased investment in supporting our customers adds to the financial support and advice we already offer and ensures more grants will be available as we go into this winter.”

While many have welcomed the move, there are calls for energy firms which have made vast profits in the last year to offer more support, as households face rapidly rising energy bills.

Some have interpreted the decision as a bid to discourage the government from introducing a windfall tax on energy providers.

Speaking to BBC Radio 4’s Today programme, Paul de Leeuw, director of the RGU Energy Transition Institute at Robert Gordon University in Aberdeen said the initial donation would only benefit 0.5% of its 7.5 million customers.

He said: “They’ve got 7.5 million [residential] energy customers in the UK, so if you look at the money that is available, it’s probably going to benefit around 40,000 people max so that’s 0.5% of their customer base.

"So 99.5% of Centrica and British Gas customers are probably not going to see any benefit from this."

He added that the firm had made a "smart move" which "pre-empts a conversation around a possible windfall tax on the energy providers".

Profit rebate of 10% is ‘farcical’

Labour MP Mary Kelly Foy criticised the move, describing it as “tokenistic philanthropy” by British Gas, intended to “fend off criticism about their profit margins”.

Her Labour colleague Bell Ribeiro-Addy said a “better idea” would be for energy firms to be brought into public ownership so that “100% of this profit” could be used to support people through the crisis.

Campaign group The Social Guarantee described the policy as “farcical” and has called for substantial reform of the energy market, including the establishment of a public energy company.

It said: “If we have learned anything from the past year, it’s that we can’t leave life’s essentials in the hands of profit-driven companies.

“We need fundamental energy market reform to ensure we’re never relying on energy company ‘donations’ to heat our homes or cook our meals.

“We need a public energy company that can give everyone access to enough affordable energy to meet our basic needs.

“This would incentivise investment in cleaner and cheaper renewable energy & in insulating our homes to lower our energy use.

“Most of our European neighbours have a state energy provider - which is why their bills have risen a fraction of what ours have.”